TMI Blog2017 (11) TMI 1536X X X X Extracts X X X X X X X X Extracts X X X X ..... ly in the impugned order reference has been made to policy Circular Nos.6 and 31. In the light of the finding that the policy circulars cannot override the statutory benefit, the rejection of the petitioner's request for being eligible for DEPB Scheme vide order dated 28.02.2003 and the consequential communications of the 4th respondent dated 20.03.2003 and 04.03.2003 are held to be unsustainable in law. It may not be necessary for this Court to declare the policy circular as either null and void or ultravires and it would suffice to hold that the policy Circulars cannot overide the statutory policy which is the Export Import Policy of the year 1997 framed under the provisions of Foreign Trade (Development and Regulations) Act, 1992 - petition allowed - decided in favor of petitioner. - W. P. Nos. 11645 to 11648 of 2003 - - - Dated:- 14-11-2017 - T. S. Sivagnanam, J. For the Petitioner : Mr. C. Saravanan For the Respondents : Mr. A. P. Srinivas, Senior Panel counsel for R1 Mr. V. Sundareswaran, Senior Panel Counsel for R2 to R4. ORDER The petitioner in all these writ petitions is a Company registered under the Indian Companies Act, 1956 and a manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rics by utilising the manufacturing facility of 100% EOU at Hosur, who is termed as Job Worker who carries out weaving operations before the manufacture of Denim Fabrics at the factory of the petitioner. The Petitioners' case is that the Fabrics were exported in terms of Chapter VII of EXIM Policy 1997-2002 under the DEPB scheme following the requirements of para 3.54 of the said policy. It is further submitted that in terms of para 7.14 of EXIM Policy 1997-2002, an exporter not desirous of going through licensing route, is given an optional facility under DEPB Scheme and he is entitled to apply for credit at a specified percentage of FOB value of exports made in freely convertible currency. The credit were made available against such export products and at such rates specified by the Director General of Foreign Trade (DGFT) by way of public notice issued in this behalf for import of raw materials, intermediate component, parts, packing materials, etc. In terms of para 7.17 of the earlier policy and 4.3.5. of the new Export Import Policy 2002-2007, exports made under DEPB scheme are not eligbile for drawback. Only additional duty of customs paid in cash on inputs under DEPB wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 2012(281) E.L.T. 486 (Kar.). The said appeal was prefered against the order passed by the revisional authority who has held that the appellants therein are not entitled to the benefit of duty drawback in respect of the goods which are manufactured in a 100% Export Oriented Unit (EOU). 7.The case of the appellant therein was that it is a manufacturer/exporter of readymade garments and entitled to duty Drawback at All India Industry Rate prescibed by the Central Government in exercise of its powers under Section 75 of the Customs Act, 1962 and also in accordance with the Customs and Central Excise Duties and Service Tax Drawback Rules, 1995. The appellant further stated that by Circular No.67/98, dated 14.09.1998 to utilise the Idle capacity of EOU/EPZ units in textile, readymade garments, etc. were permitted to undertake job work from DTA Units with a condition that the finished products produced by such EOU/EPZ were exported directly from the EOU/EPZ units and the goods are not sent back to the DTA units. The appellant approached the 100% EOU unit which was also the second appellant in the said appeal for manufacuring of readymade garments. The first appellant supplied raw ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Department from time to time, it has been made clear that the benefit of duty drawback is not available to a manufacutre who manufacture the goods in a EOU. In the background of these facts, the Court considered the issue, took note of Section 75 of the Customs Act, which deals with drawback on imported materials used in the manufacture of goods which are exported and held as follows :- 11. A reading of the aforesaid provisions makes it very clear that goods of any class or description manufactured, processed or on which any operation has been carried out in India. If exported, drawback should be allowed of duties of customs chargeable under this Act on any imported materials of a class or description used in the manufacture or processing of such goods. Sub section (2) of Section 75 vests with the Central Government, the power to make Rules for the purpose of carrying out the provisions of sub-section (1). It is in pursuance of such power conferred, the Customs and Central Excise Duties Drawback Rules, 1995 has been framed. 9.After referring to the Circular No.74/99 dated 05.11.1999 dealing with manufacture of goods in EOU as job work and Drawback and further Circular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck. If we look into the scheme of the Rules, it becomes clear that if the Government by notification decides what is public policy known in trade terms as All Industry rate, irrespective of the duty paid on raw materials, the exporter of the finished products, would be entitled to Duty Drawback at such rates. Under the Rules, if he has paid more duty and the All Industry Rate is low, he has to approach the authorities under the Rules for enhancement of the Duty Drawback to which he is legally entitled to. If on such application, on being satisfied from the material produced by such exporter, the authority can fix a higher rate than the All Industry rate, which is known as Brand Rate Drawback rate. Therefore, the Circular making it obligatory for DTA to get the goods manufactured in a EOU to necessarily approach the authorities for fixation of Brand Rate Drawback rate. Therefore declaring that he is not entitled to All Industry rate, is arbitrary, absurd and does not stand to reason. As always brand Rate Drawback rate is higher than the All Industry rate, the choice is that of the exporter. If he is satisfied with the All Industry rate, if he is not interested in approaching the aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de under the DEPB Scheme shall not be entitled for drawback. However, the additional customs duty paid in cash on inputs under DEPB shall be adjusted as CENVAT Credit or Duty Drawback as per rules framed by the Deptt. of Revenue . In cases, where the Additional Customs Duty is adjusted from DEPB, no benefit of CENVAT/Drawback shall be admissible. 12.This benefit which flows from the statutory policy is sought to be denied based upon the policy Circular Nos.6 and 35 as held in the case of Karle International Vs. Commissioner of Customs, Bangalore reported in 2012 (281) E.L.T. 486 (Kar.), the right conferred in the statute which in the instant case is in the nature of Export Import Policy cannot be taken away by issuing Circulars. Thus, the benefit which has accrued to the petitioner by virtue of Export Import Policy cannot be denied by relying upon the impugned policy circulars. Though the petitioner has challenged the amendment to Circular No.31/2000, eventually in the impugned order reference has been made to policy Circular Nos.6 and 31. In the light of the finding that the policy circulars cannot override the statutory benefit, the rejection of the petitioner's request ..... X X X X Extracts X X X X X X X X Extracts X X X X
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